Determining when to outsource legal services

This article is the last in a four-part series (Part 1, Part 2 and Part 3) on implementing a corporate legal process outsourcing (LPO) solution. It highlights key considerations related to determining timing of a LPO initiative.

Once a corporate legal department determines which services to outsource, it should next determine the ideal time to make such a transition. In assessing whether a function is ready for outsourcing, a company should determine whether the process requires further maturation within the organization before being sourced and, if so, whether they should outsource before, during or after internally transforming those processes. As LPO solutions become more commonplace in the market, corporate legal departments are beginning to take a more sophisticated approach to legal service assessment and to view LPO as a way to supplement or complement broader corporate transformation initiatives.

In the case of legal, generally the type of service dictates when a process can be sourced. For example, the nature of litigation is often unforeseen and driven with a sense of immediacy. If a company is facing a large unexpected litigation or has a minor impending transactional matter (i.e. small contract management task), they should consider whether the immediacy of outsourcing outweighs the need to fine tune internal e-discovery processes. On the other hand, when a company has anticipated, steady transactional work, such as a voluminous IP or contract portfolio, they may want to consider whether to assess and refine their IP or contract management processes prior to sourcing to an external provider.

As many legal departments are “testing the waters” with LPO strategies and providers, they may elect to utilize an LPO provider in a test pilot in a low risk legal function or particular legal matter. In this instance, a company may elect to implement an LPO solution during the course of an internal legal service delivery transformation — or at least at the point when the legal department has been able to assess those areas in which they spend the most time and money.

Another factor which drives LPO involves ethical considerations germane to the legal sector. The American Bar Association (ABA) provides certain guidelines for companies to consider when selecting an LPO provider. Such requirements for analysis involve assessing the LPO provider’s qualifications, ensuring that the project will receive adequate supervision from a corporate attorney as well as attorneys within the LPO provider’s structure, and ensuring that the LPO provider can meet any other confidentiality, data security and other regulatory requirements by which the company is bound. Depending upon the LPO provider and amount of analysis required, this may affect the timing of a company’s legal sourcing decision.

Under the right circumstances, the issues facing corporate legal departments can be effectively affected by a broad legal service delivery transformation approach involving legal process outsourcing. (See Figure 1.) Clearly, such a transformation involves the evaluation of many complex factors. In the end, corporate legal departments need to consider all aspects of the legal sourcing decision making process — including, where to outsource, what to outsource, who to outsource to and when to outsource — when determining whether to make the shift to an LPO provider.

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